By SCP Fellow Liliana Locke | Part of our Special Series: Always Canada. Never 51.
The Trump administration’s tariffs and threats are hurting many Canadian businesses. But there is an equally concerning threat closing main street doors and costing jobs: skyrocketing and unregulated commercial rent increases.
Business closures in Ontario increased by almost 10% between January 2023 and January 2024. I interviewed a dozen long-time business owners in Ontario who say they wouldn’t start their businesses here today if given the chance to begin again. These are skilled entrepreneurs, often running family businesses with decades of experience. The problem isn’t their business models or talent—it’s the mounting external pressures that make success so difficult.
While business costs are up across the board, one of the biggest pain points is commercial rent. According to a recent survey by the Better Way Alliance (BWA), a network of Canadian business owners that advocate for fair wages, reasonable work hours and equitable workplace conditions, 75 per cent of businesses that had renewed their commercial leases experienced a rent increase by double or triple digits.
According to the Toronto Regional Real Estate Board, retail rents in Toronto have risen by a whopping 128 per cent since 2020. In cities like Toronto, Vancouver and Waterloo, industrial rents have doubled over the past eight years and, in 2024, approximately half of businesses across Canada reported difficulty coping with rising occupancy costs.
Large commercial real estate landlords, and the global multinationals that can afford their storefront leases, are transforming our neighbourhoods in ways that undermine Canada’s economic resilience and economic sovereignty. We’ve all seen a new condo tower wipe out local shops and replace them with predictable pizza chains and cookie-cutter convenience stores–often owned by global firms or American investors.
When those local independent businesses close, we’re not just losing unique retail shops and services—we’re losing good jobs for local workers, wiping out retirement savings for long-time business owners and making it harder for new entrepreneurs to take the leap.
Contrary to some beliefs, a shortage of commercial real estate is not what’s behind the rising rents.
Often, big landlords have little incentive to negotiate fairly, because they’re willing to forgo rent payments today to hold out for a higher-paying tenant tomorrow—even if it means leaving storefronts vacant. For some commercial real estate investors, leaving the property empty and expecting appreciation in its value is a perfectly reasonable business strategy, even if it is bad for the community.
In Canada, commercial renters don’t have the same legal protections as residential tenants. Policymakers and the public both understand that if a business faces tariffs of 25%, they may not be able to survive. And yet provincial and territorial governments have been unwilling to step in to prohibit commercial rent increases of 25% or far more.
“Policymakers and the public both understand that if a business faces tariffs of 25%, they may not be able to survive. And yet provincial and territorial governments have been unwilling to step in to prohibit commercial rent increases of 25% or far more.”
The exploitation happens because it’s been allowed to happen. Commercial leases are not only not protected by province- or territory-wide rent control caps, but most jurisdictions don’t offer affordable dispute resolution: in Ontario, for instance, commercial landlords can evict a tenant only 16 days after rent is missed, effectively making it impossible to withhold rent if a landlord has failed to cover unexpected repairs or renovations.
There are jurisdictions that have solved for commercial rent hikes that we can learn from in this moment.
France caps commercial rent increases at 10 per cent between lease terms and prohibits tenants from paying for major repairs. Small retail tenants in Australia have access to mediation services for disputes. In New York, tax incentives encourage landlords to lease long-term to local businesses in order to create jobs and California recently adopted progressive legislation that caps rent increases for small brick-and-mortar businesses, while granting tenants additional protections.
In Vancouver, the New Westminster city council passed a motion in 2024 asking the province to explore commercial rent controls to help local businesses and Toronto City Council followed suit shortly after. Toronto voted almost unanimously for a motion that requested the Province of Ontario implement commercial rent reform and other legal protections for commercial tenants—unfortunately, for all its “Canada is not for sale” talk (and hats), the province has not yet moved on these small business protections.
Urgent, actionable changes to provincial and territorial commercial tenancies acts can level the playing field for Canadian small businesses under threat. These include:
Standardized commercial lease agreements, which help both parties understand their responsibilities and obligations.
A dispute resolution system to reduce legal fees and costly court delays.
Legal protection that allows businesses to withhold rent to offset money owed by a landlord—without fear of eviction.
Predictable rent increases through rent caps for commercial leases—similar to those in residential tenancy laws—which would provide business tenants with fair rent changes and the stability they need, while allowing landlords to remain profitable.
With commercial rent control, small businesses could focus on growing and investing in their businesses, rather than grappling with uncertain rent spikes. Especially right now, this kind of growth is crucial in fostering the wellbeing of local economies, protecting and generating Canadian jobs and keeping Canadian businesses locally owned.
A lack of commercial tenancy protections causes undue financial distress and threat of closure. Smart policy in the commercial rent market would provide Canada’s small businesses the vital opportunity to make the investments necessary to overcome this moment.
Canadians are seized with a commitment to buy locally. But many of our policy frameworks are crushing local small businesses, and the only ones that can afford rent are the big global chains. That is not good for the resilience of Canadian businesses or communities. It is also clearly not what Canadians want.
Share with a friend
Related reading
Budget 2025 should bolster employee ownership to strengthen Canada’s economy | Canadian Dimension
Budget 2025 offers Canada a chance to make employee ownership permanent by extending tax incentives for employee ownership trusts (EOTs) and worker co-ops. In Canadian Dimension, Simon Pek, Lorin Busaan and Alex Hemingway write that doing so would boost productivity, reduce inequality and secure business succession, while keeping jobs and decision-making local. A modest investment promises significant economic and social dividends.
What being an employee-owned company means to me
For what it’s like to be on the inside of an employee-owned company, we spoke to a few of the 750 employees who recently became 100-per cent owners of Taproot Community Support Services, a social services provider across B.C., Alberta and Ontario. Rewards the employees highlighted include company morale and spirit, for sure. They also include financial rewards paid out annually to each employee as dividends. Last year, each employee would have received about $1000 to $1500 on top of their salaries—and as the company succeeds over time, the employees will share financially in Taproot’s success.
Wealth inequality in Canada is far worse than StatsCan reports
Our government’s best available data on Canada’s wealth gap excludes, by design, the wealthiest families in the country. As SCP Director of Policy Dan Skilleter writes, if we didn’t have the Parliamentary Budget Officer fact-checking Statistics Canada’s work, their numbers would tell us the top one per cent own only 2.5 per cent of all wealth – not nearly 25 per cent of all wealth in Canada, as the PBO reports. We like to think of Canada as a beacon of egalitarianism compared to our southern neighbours, but when you add in data from "rich lists" published by Forbes and Maclean's, our wealth concentration looks quite similar to the U.S.